George Allen / EducateMHC Blog Mobile Home & Land Lease Community Advocate & Expert

April 21, 2023

Be Careful What You Read & Believe!

Filed under: Uncategorized — George Allen @ 6:22 am

Blog Posting # 738, Copyright 21 April 2023. EducateMHC

Parallel Perspectives. HUD-Code manufactured housing is federally-regulated, performance-based, affordable factory-built housing! And land lease communities (a.k.a. manufactured home communities & ‘mobile home parks’) comprise the investment real estate component of manufactured housing! EducateMHC alone is the online advocate, historian, trend tracker, and text resource for these two business models! To input this blog or connect with EducateMHC, telephone (317) 881-3815, email: gfa7156@aol.com, or visit www.educatemhc.com, to order Community Management in the Manufactured Housing Industry. This is the sole professional community management text in print today! And SWAN SONG is a history of land lease communities and official record of annual MH production totals since 1955; and my autobiography, From SmittyAlpha6 to MHMaven – describes my combat adventures in Vietnam & 40+ years business career in MH and communities.

George Allen, CPM®Emeritus, MHM®Master, Emeritus member of MHI, RV/MH Hall of Fame enshrine, retired lieutenant colonel of U.S. Marines, and author/editor of 18 non-fiction texts

Be Careful What You Read & Believe!

In a recent article titled ‘Mobile home park residents form co-ops to save their homes’, the president & CEO of Lincoln Land Policy, in Cambridge, MA, is quoted as saying:

“Nearly a third of mobile home parks in the U.S. have been bought by such (institutional) investors since 2015.” Hmm. Is this possible? Depends on what benchmark numbers are being used. For example, is this 1/3rd of all 50,000 land lease communities (of all sizes) throughout the U.S.? Or is the executive focusing his attention on just the institutional investment grade communities, i.e. more than 100 rental homesites in size, generally with public utilities, good infrastructure, and few to no functionally obsolete homesites (i.e. too small to handle large contemporary manufactured homes)? Makes a whale of a difference in the results.

And then there’s this quote: “They ROCs (i.e. resident-owned communities) have a 100% track record of success.” Really? This is like saying ‘always’ & ‘never’ in one’s pontificating. Just don’t do it; too easily proven wrong. The same pundit should check with the Florida Manufactured Housing Association (‘FMHA’), and others, for definitive information on this tenuous topic.

Oh, and it goes without saying, when folk from outside the manufactured housing industry and land lease community real estate asset class easily use the archaic term ‘mobile home park’, it instantly labels them a ‘newbie’ to the industry, someone who simply does not know any better! Manufactured home community replaced ‘mobile home park’ in 1994, following national trade terminology surveys by the Manufactured Home Merchandiser magazine and publishing of the land development text: Development, Marketing & Operation of Manufactured Home Communities by the late David Alley, George Allen, and Edward Hicks. And Land lease community became commonplace by 2010. So, 13 years later we still struggle with naïve folk who still call this unique income-producing property type by the 1960s & 70s term, ‘mobile home park’.

And then there was this quote in an article titled: ‘An Intro to Manufactured Home Communities. What Investors Need to Know’:

“(average rent for a conventional apartment unit) was $1,345 in June 2022; however the average rent for an MHC site was $596 in mid-2022, according to a report by Cushman & Wakefield.”

I don’t quibble with the accuracy of these two monthly rent figures. It’s just that they’re of questionable veracity more information. For example, using the traditional 3:1 Rule for estimating land lease community rental homesite rate, based on apartment rent of $1,345/month, would peg this local housing market at $448/month per site, not $596. Or, the other way around, with rental homesite rate at $596, then it’s logical to expect monthly rent for a 3BR2B conventional apartment or townhouse unit to be $1,788, not $1,345. (Assuming all other rent-related factors are treated the same, e.g. water, sewer, utilities, etc.)

Three Strikes & We Could Be Out of Business!

In the past I’ve criticized MHARR executive Mark Weiss for, in my opinion, being too wordy in many if not most of his industry newsletters and ‘calls to action’. Well this time around he frames four challenges facing the manufactured housing industry and land lease communities in a direct and succinct fashion. Here he states:

“Aside from the 1) market-killing and discriminatory DOE rule…2) discriminatory and exclusionary zoning laws, 3) consumer chattel financing availability, 4) unnecessarily-high interest rates due to lack of GSE support under DTS, continue to lie at the root of the industry’s problems….” AMEN Mark, you’ve got that right, from start to finish!

This had been Mark’s response to an email message I sent him following his lament about MH production’s continuing decline through February 2023.

While Mark and I agree on the four factors he cites in the previous paragraph, I believe there’s at least a fifth to add, though it is difficult to articulate. But here’s my attempt to do so:

The turn of the century (i.e. year 2000+) saw not only MH production plummet, from 372,943+/- in 1998 to 48,789+/- by 2009, but the consequential loss of easy access to home-only loans (i.e. chattel capital),  resulting in the disappearance of 10,000+/- independent (street) MHRetailers – nary to return (e.g. 20 in Indianapolis in 1998, only one today!). With the introduction of ‘community series homes’ in 2009, land lease community owners/operators became increasingly engaged in on-site sales, siting, and seller-financing of new manufactured homes – to the extent the usual 15% of new homes going into communities rose to more than 40% by year 2015! And that’s pretty much where we are today. Still far too few MHRetailers to ‘make a difference’ and “too few” vacant rental homesites to fill with new product.

Some say there’s a ‘sixth challenge’, one related to all that’s been penned before this paragraphs (except possibly for the DOE rule being fought today in Washington, DC), that of marginal leadership at the very top of the manufactured housing industry and land lease community real estate asset class. Won’t go into detail here, and at this time, but to ask:

  • When was the last time you have heard or seen the ‘Big 3-C HUD-Code manufacturers’ united, and effectively raising public awareness of our manufactured housing product to the American homebuying/site leasing and scattered owned-homesite buyers? 
  • When was the last time you have heard or seen MHI’s National Communities Council (‘NCC’) division publicly decry inflationary site rent increases, and other abuses, being foisted on land lease community homeowners/site lessees almost nationwide?

Both these serious shortfalls deserve, no – demand, national discussion at the highest levels of our industry and realty asset class! But is it happening? Well, maybe so at the MHCongress in Las Vegas this week – but I doubt it. Why? Because it’s going to take industry observers and commentators like me, present at such venues, to challenge those very leaders. And so far it simply is not happening. Invite me, pay my travel expenses, and I’ll attend and challenge!

Bottom line? Until we get rid of local regulatory barriers to all forms of affordable housing (i.e. land planning & zoning/rezoning); secure consistent abundant affordable personal property financing for new and resale homes; get the GSEs, once and for all, in strong support of the industry and realty asset class at large (and not just ROCs); and relief from the pending DOE (an apt albatross-like metaphor) Rule, WE are collectively ‘dead in the still waters’ of underproduction cum lack of prosperity for all of us! Anyone out there paying attention?

I do, Mark does, and I’m confident Leslie does; but why don’t ALL our industry and asset class leaders ‘see it’, come together, and do something about this unfolding tragedy? Again, I wonder if all this was a topic of group conversations during the MHCongress in Las Vegas this week? Next best opportunity for an industry-wide, business-saving conversation? The morning of, or morning after, this year’s RV/MH Heritage Foundation’s Hall of Fame induction banquet on 21 August 2023. I certainly plan to be present; how ‘bout you? For tickets, call (574) 293-2344.

GFA

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